President Bush Petitions For Rest Of Bailout Funds
RENEE MONTAGNE, host:
This is Morning Edition from NPR News. I'm Renee Montagne.
STEVE INSKEEP, host:
And I'm Steve Inskeep. President-elect Obama wants another $350 billion in bailout money. So all he has to do is win over lawmakers who think the last 350 billion was badly spent. In a moment, we'll hear from one key congressman, Barney Frank. First, NPR's Scott Horsley explains why some lawmakers are skeptical.
SCOTT HORSLEY: Congress hastily approved the bailout package, known as TARP, in the midst of the financial meltdown last fall without a lot of strings attached. But there was one, and it's threatening to tie the new administration in knots. Before the Treasury Department can spend the second half of the bailout money - $350 billion - the president has to get permission from Congress. Mr. Obama is now making that request via President Bush. He says he wants to have a lifeline available in case the financial system is once again in danger of going under.
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President-elect BARACK OBAMA: In consultation with the business community and my top economic advisers, it is clear that the financial system, although improved from where it was in September, is still threatened.
HORSLEY: Mr. Obama spoke during a photo op with the president of Mexico. He acknowledges that the first half of the bailout money has done little to help homeowners struggling to pay their mortgages, or business people trying to get credit. Wall Street firms that took advantage of the government's money were not required to make credit more widely available. Mr. Obama promises fundamental changes in how the second half of the money will be used.
President-elect OBAMA: We're going to focus on housing and foreclosures. We're going to focus on small businesses. We're going to focus on what's required to make sure that credit is flowing to consumers and businesses to create jobs in the United States.
HORSLEY: The president-elect's economic adviser, Larry Summers, put some of those promises in writing yesterday. In a letter to congressional leaders, Summers guaranteed some of the money would flow to neighborhood banks, small businesses and consumers in need of credit. He also promised a full accounting of how the money is spent and, he said, firms that receive bailout assistance will be subject to strict and sensible limits on dividends and executive pay. Some lawmakers say they're reassured by those conditions, but others are still reluctant to free up the additional money. Dick Durban, the number two Democrat in the Senate, says the request for the bailout funds is likely to face some tough questioning, even from members of the president-elect's own party.
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Senator DICK DURBAN (Democrat, Illinois): There are a lot of people who are critical and skeptical of the first $350 billion spent by the Bush administration, and we have to convince them that this money is going to be in the hands of the new president, Barack Obama, and a new administration that will have new rules, more transparency, more accountability and, I hope, better impact on the economy.
HORSLEY: A House committee holds a hearing today on conditions that could be attached to the second half of the bailout money. Committee chairman Barney Frank says lawmakers should not allow their disappointment with the way the first half of the bailout was used to prevent the Obama administration from using the rest of the money in more appropriate ways. Scott Horsley, NPR News, Washington.